Bankrupt Defendants in Binghamton Personal Injury Cases

Getting hurt because of someone else’s negligence is bad enough. But what if the person responsible declares bankruptcy? Is there anything you can do to secure the money you were counting on for medical bills, lost wages, and pain and suffering?

In New York, like everywhere else, insurance companies and defendants use bankruptcy loopholes to dodge injury payouts. The personal injury lawyers at Horn Wright, LLP, can help you navigate these legal complexities.

We provide personalized representation because we understand each case is unique. And as client-centric law firm in Binghamton, we do everything we can to get you justice.

The Dirty Secret: How At-Fault Drivers Use Bankruptcy to Escape Paying You

You’re driving down Front Street, minding your own business. Out of nowhere, another car slams into you. The driver was speeding, texting, or just plain reckless. You file a claim, expecting their insurance to cover your medical bills, car repairs, and lost income. But then they file for bankruptcy. What now?

Dischargeable vs. Nondischargeable Debts

Not all debts get erased in bankruptcy. Some stick around, no matter what.

• Dischargeable debts: These include credit card balances, medical bills, and most negligence-based personal injury claims. If someone hits you because they weren’t paying attention, bankruptcy might let them off the hook.
• Nondischargeable debts: These are debts the court won’t erase, such as child support, certain tax debts, and personal injury claims caused by willful or malicious actions—think drunk driving or intentional harm. If the driver was under the influence, you’ve got a much stronger case for getting paid.

Think You Can’t Sue a Bankrupt Defendant? Think Again.

If the person who caused your injury declares bankruptcy, you might think you’re out of options. Not necessarily. You can still pursue compensation—it just depends on a few factors.

Personal Injury Exceptions in Bankruptcy

• Insurance Still Pays: Even if the defendant goes bankrupt, their insurance company may still have to cover your claim.
• Judgment for Insurance Purposes: Courts sometimes allow lawsuits to continue just to establish the defendant’s liability, so you can claim payment from their insurance.
• Fraud or Recklessness: If the defendant’s actions were intentional or grossly negligent—like a DUI crash—you can argue the debt is nondischargeable and keep your case alive.
• Car Accident Legal Help: A Binghamton car accident lawyer can help you navigate these complex legal challenges.

The Silent Killer of Injury Lawsuits: Automatic Stays That Stop You Cold

Once someone files for bankruptcy, something called an automatic stay kicks in. It’s like a giant “pause” button on all lawsuits, stopping creditors (including injury victims like you) from collecting money. Your case could be frozen for months—or even years.

Ways to Navigate Automatic Stay Issues

• Insurance Coverage Exists: If the defendant has an insurance policy, you can often get the court to lift the stay so you can pursue compensation from the insurer.
• Minimal Impact on the Bankruptcy Estate: If your claim won’t take money from other creditors, the court might let your lawsuit move forward.
• Filing a Motion to Lift the Stay: An experienced personal injury law firm can help you petition the court to let your case proceed.

What Happens If You File for Bankruptcy? Your Settlement Could Be at Risk.

If you’ve got a pending personal injury case or just won a settlement, filing for bankruptcy can put that money in jeopardy.

Chapter 7 Considerations for Plaintiffs

• Liquidation Risk: Under Chapter 7, a trustee can take your injury settlement and use it to pay your debts.
• New York Exemptions: New York law protects some of your personal injury settlement, particularly money meant for medical bills and lost wages.
• Pain & Suffering Exemption Limits: Compensation for pain and suffering might not be fully protected.
• Workplace Injury Compensation: If your injury happened on the job, you may be entitled to workplace injury compensation, which could be shielded from creditors under New York law.

Chapter 13 and Structured Payments

• Repayment Plan Instead of Liquidation: In Chapter 13, you won’t lose your settlement outright, but you may have to use part of it to pay off creditors.
• Protecting Your Money: Courts may let you keep some of your settlement if it’s needed for future medical care or daily living expenses.
• Full Disclosure is Key: Hiding a settlement from the bankruptcy court is a major mistake—it could get your case dismissed or worse.

Binghamton’s Best Kept Secret: How to Shield Your Settlement from Creditors

Just because you’re filing for bankruptcy doesn’t mean you have to lose your personal injury settlement. Here’s how to keep what’s yours.

How Settlements Are Treated in Bankruptcy

• State-Specific Protections: New York lets you protect some of your settlement—but you have to file the right exemptions.
• Strategic Planning: Timing matters. If you’re expecting a big settlement, filing bankruptcy first might help shield your money.
• Legal Help is a Must: A bankruptcy lawyer can help you maximize exemptions and keep as much of your settlement as possible.
• Slip and Fall Lawsuit Protection: If your settlement comes from a slip and fall lawsuit or a medical malpractice claim, you may be able to exempt a portion of it under New York state laws.

Let our Trusted Binghamton Personal Injury Attorneys Help You Secure What’s Rightfully Yours

Bankruptcy loopholes can make personal injury cases messy. But that doesn’t mean you’re out of options. Whether you’re fighting against an at-fault driver’s bankruptcy or trying to protect your own injury settlement, knowing the rules gives you power. 

Don’t let the system leave you empty-handed—there are ways to fight back and get what you deserve. If you're dealing with a complex injury case, consulting Horn Wright, LLP, one of the best law firms in America can help you protect your rightful compensation.

If you’re ready to get started, contact our office to request your free, no-obligation initial consultation.